Finally, Vijay Mallya must’ve thought he was out of the woods.
After all, he’d been able to wrangle an enviable severance package—Rs515 crore ($75 million)—from British spirits major Diageo for quitting as chairman of Bengaluru-based liquor company United Spirits Ltd (USL).
“I have always lived an honourable life and the calumny notwithstanding, shall continue to do so. As to the allegations in media, all I can say is I hope some sobriety and sense will prevail and truth not held a hostage to TRPs,” he said in a statement on Monday (March 7).
Mallya is one of India’s most high-profile businessmen, known for his flamboyance and high visibility. He created a vast business empire out of a company inherited from his father Vittal, turning it into India’s largest spirits maker.
But his fortunes reversed over the last few years. Even his dreams of leaving India and settling in London after parting ways with Diageo were dashed within days.
On Monday, the Debt Recovery Tribunal in Bengaluru ruled that he cannot access the Rs515 crore from Diageo till he settled the dues Kingfisher Airlines—his once flamboyant, now defunct airline—owed to various lenders, including the State Bank of India.
It was also reported on the same day that the Enforcement Directorate had filed a money laundering case against Mallya and a few of his colleagues for defrauding banks.
This situation has been a while in the making.
In December 2012, Kingfisher Airlines—which began operations in 2005—dropped dead mid-flight. The company spread its finances too thin with ambitious buyouts of rivals and uneconomical operations. It was grounded in 2012 following non-payment of dues to authorities.
Once dubbed ”funliner”, it today owes over Rs7,000 crore to various entities. In this financial cesspool, Mallya even lost USL, his family silver, USL.
Hundreds of his employees have gone without salaries for months—risking their careers as well as money in hope that some day he would make good their losses. They tried emotional appeals, legal threats, and even stoppage of work to get their dues. Distraught employees’ family members even killed themselves.
But nothing moved Mallya. Till recently, one could be forgiven for thinking that the person facing all these woes was someone else, not the 60-year-old strutting the country’s party circuit.
In February 2014, when he owed his employees around Rs350 crore in salaries, Mallya splurged around Rs30 crore in the Indian Premier League (IPL) auction for his cricket team Royal Challengers Bangalore. There were allegations that Mallya had diverted funds from USL towards IPL.
The impression one got was that neither the airline nor its woes was really among Mallya’s chief concerns. Kingfisher Airlines was merely part of his “billionaire bucket list.”
“He has a Formula 1 team. He owns the Royal Challengers Bangalore cricket team, and his UB Group, which gets most of its money from selling beer, owns two Indian football clubs. He owns Ferraris, a 1969 M10 McLaren. Hell, he even owns an Edsel. So the only thing missing from his things was a collection of French-made Airbuses flying the logo of the proud blue and orange kingfisher bird that dons Kingfisher beer,” Forbes magazine had said in April 2014.
Perhaps, it was this mistimed ostentation that led Raghuram Rajan, the Reserve Bank of India governor, to remark earlier this year that big defaulters must avoid making an ugly show of wealth. Mallya had only recently blown up a lot of money on his 60th birthday bash in Goa.
Then came the thunderbolt: After a long legal battle, British spirits major Diageo, which had earlier taken control of USL, settled a deal with Mallya. He would be paid Rs515 crore in exchange for replacing him as chairman. As if crash-landing the airline wasn’t enough, Mallya was seen abandoning his own people and making away with a sweet deal.
The tribunal, however, stepped in to bring curtains down on such obscene play of arrogance, indifference and insensitivity. The absurdity of it all got more glaring when Mallya turned around and accused the media of singling him out.
Mallya’s shenanigans are not the first. Nor will they be the last. India’s flashy billionaires have often earned the ire of authorities and investors, besides commoners, for their public misdemeanour. But, with the country’s banking system under acute pressure of mounting bad debts, corporate brazenness of this kind is bound to kick up a storm.